Why does SharePoint apply 'exempt from policy' automatically?

Question

I have a custom SharePoint document library which allows items to be added of a custom content type. This content type is given a custom expiration policy based on a meta data column.

The expiration policy is the following:

<data>
  <formula id=""Microsoft.Office.RecordsManagement.PolicyFeatures.Expiration.Formula.BuiltIn"">
   <number>1</number>
   <property>DeadlineDate</property>
   <period>days</period>
  </formula>
  <action type=""action"" id=""Microsoft.Office.RecordsManagement.RecordsRepository.RecordsRepositoryExpirationAction"" />
</data>

The expiration policy should expire the item 1 day after the deadline date. When this is tested in my development environment for an item with a deadline date in the past, the policy deletes the item without an issue. However when in my QA environment the same scenario is tried, a deadline date is in the past, the item is not deleted but instead the 'Exempt from Policy' field is set to true and the following error message is generated in the SharePoint log:

03/12/2009 11:24:17.59 OWSTIMER.EXE (0x0568) 0x05A0 DLC Server Information Policy Management 3935 Critical The custom Microsoft.Office.RecordsManagement.RecordsRepository.RecordsRepositoryExpirationAction expiration action is no longer valid or available.

I am looking for any ideas as to why the "Exempt from Policy" would be getting set automatically after the expiration service is ran?

Thanks.